Pandora A/s · OMXCOP:PNDORA
Pandora A/s — Pandora A/S Ord — Q3 2022 Earnings Presentation
42 slides from Pandora A/s's earnings presentation, Nov 12, 2022
Slide 1: Third Quarter Results 2022
THIRD QUARTER RESULTS 2022 08 NOVEMBER 2022
Slide 2: Agenda of Today
AGENDA OF TODAY 1. EXECUTIVE SUMMARY 2. PHOENIX UPDATE 3. Q3 2022 FINANCIALS 4. FINANCIAL GUIDANCE 5. APPENDIX DISCLAIMER This presentation contains forward-looking statements, which include estimates of financial performance and targets. These statements are not guarantees of future performance and
Slide 3: Executing on Phoenix and Solid Performance
EXECUTING ON PHOENIX AND SOLID PERFORMANCE $ Sustainable growth Diamonds by Pandora Profitable growth Another solid quarter Launch in North America Strong underlying EBIT well received – a key margin milestone in the Phoenix ASP’s increased by 4% early strategy Q4 3 Pandora Q3 2022 - Investor presen
Slide 4: On Track to Deliver on 2022 Guidance
ON TRACK TO DELIVER ON 2022 GUIDANCE ORGANIC EBIT GROWTH MARGIN 4-6% (Unchanged) 25.0-25.5% (Unchanged) For assumptions behind the guidance, please refer to slide 21-23 4 Pandora Q3 2022 - Investor presentation 4 Pandora Q3 2022 - Investor presentation
Slide 5: Well Positioned for Elevated Macro Uncertainty
WELL POSITIONED FOR ELEVATED MACRO UNCERTAINTY PRE-EMPTIVE STEPS TO PROTECT PROFITABILITY Alexander Lacik, CEO: “Despite macroeconomic and geopolitical uncertainty, the shopping pattern of our consumers is so far largely unchanged. With strong financials and our position in affordable gifting, we ar
Slide 6: Agenda of Today
AGENDA OF TODAY 1. EXECUTIVE SUMMARY 2. PHOENIX UPDATE 3. Q3 2022 FINANCIALS 4. FINANCIAL GUIDANCE 5. APPENDIX 6 Pandora Q3 2022 - Investor presentation
Slide 7: Phoenix Strategy Execution Is Progressing Well
PHOENIX STRATEGY EXECUTION IS PROGRESSING WELL GROWTH PILLARS INITIATIVES Q3 2022 UPDATE Most recognisable jewellery brand in the world BRAND • Prince increases of 4% implemented early Q4 Drive higher brand penetration • Pandora Moments continues to grow Drive the core (Moments platform) DESIGN • Pa
Slide 8: Pandora Is Taking an Industry Lead in Driving Sustainability
PANDORA IS TAKING AN INDUSTRY LEAD Foundation SUSTAINABILITY IN DRIVING SUSTAINABILITY Targets LOW-CARBON BUSINESS CIRCULAR INNOVATION INCLUSIVE, DIVERSE AND FAIR CULTURE Reduce emissions across own operations Use 100% recycled silver and Achieve 1/3 females in and full value chain 50% by 2030, and
Slide 9: Pandora Increases Prices by 4%
PANDORA INCREASES PRICES BY 4% Growth pillars BRAND ▪ As communicated previously, Pandora has successfully reduced the promotional level and thereby indirectly increased prices the past few years ▪ Now, Pandora has implemented a more traditional list price increase on selected items, after successfu
Slide 10: Driving the Core: Moments Continue to Deliver
DRIVING THE CORE Growth pillars DESIGN MOMENTS CONTINUE TO DELIVER 71% Share of business in Q3 2022 2% Sell-out growth vs Q3 2021 10 Pandora Q3 2022 - Investor presentation
Slide 11: Fuel with More Diamonds by Pandora Launch
FUEL WITH MORE Growth pillars DESIGN DIAMONDS BY PANDORA LAUNCH “Diamonds are not just forever; They are for everyone.” Key points: ✓ 3% share of business in US - 5% share of business in stores offering collection ✓ 15x higher average selling price than normal business in US ✓ 50% of transactions ar
Slide 12: Q3 Topline Growth in Line with Plan
Q3 TOPLINE GROWTH IN LINE WITH PLAN Growth pillars CORE MARKETS • The Group topline developed in line with plan – on a country Sell-out growth level there are several individual factors influencing growth (like-for-like)* Organic growth • As expected, organic growth vs 2019 was lower in Q3 2022 vs v
Slide 13: Network Development Shows Great Potential Ahead
NETWORK DEVELOPMENT SHOWS Growth pillars CORE MARKETS GREAT POTENTIAL AHEAD O1 Analysed top markets O2 Mapped 13,000 locations Extrapolated 7,000 viable commercial locations O3 O4 Identified 600* best locations: ~50% in US and China O5 Planned to roll-out in phases *Included in the 600 locations is
Slide 14: Network Development Starting to Be Visible in the Numbers
NETWORK DEVELOPMENT Growth pillars CORE MARKETS STARTING TO BE VISIBLE IN THE NUMBERS DKK 630 million incremental revenue from network development so far in 2022: NETWORK EXPANSION FORWARD INTEGRATION INCL. TAKEOVERS DKK 240 million revenue YTD 2022 DKK 390 million revenue YTD 2022 ** • During 2022
Slide 15: Agenda of Today
AGENDA OF TODAY 1. EXECUTIVE SUMMARY 2. PHOENIX UPDATE 3. Q3 2022 FINANCIALS 4. FINANCIAL GUIDANCE 5. APPENDIX 15 Pandora Q3 2022 - Investor presentation
Slide 16: Key Financial Highlights
KEY FINANCIAL HIGHLIGHTS THIRD QUARTER IN LINE WITH GUIDANCE EXPECTATIONS COMMENTARY TOPLINE Q3 2022 Q3 2021 • Performance in Q3 was in line with expectations – trending in the upper end of the guidance Revenue, DKK million 5,263 4,728 Organic growth 3% 14% • Strong underlying EBIT margin. As previo
Slide 17: Revenue Performance
REVENUE PERFORMANCE GROWTH CONTINUES, SUPPORTED BY NETWORK EXPANSION COMMENTARY • Compared to 2019, organic growth was +13% in Q3 2022 GROWTH COMPOSITION VS Q3 2021 Q3 dragged down 8pp by China %-p growth (approximately) • Network expansion & takeover of partner stores DKK million where no goodwill
Slide 18: EBIT Margin
EBIT MARGIN COMMENTARY STRONG PROFITABILITY • Continued strong EBIT margin %-p development (approximately) EBIT margin development excl. non-recurring items • The underlying EBIT margin is above last year 20.2% -0.1% -0.2% 20.0% • The Q3 2022 EBIT margin includes a -0.5% 0.7% -0.8% 0.8% temporary dr
Slide 19: Deliberate Inventory Increase with Low Risk of Markdowns
DELIBERATE INVENTORY INCREASE WITH LOW RISK OF MARKDOWNS • During 2022, inventories have increased by DKK 2.2 billion 5.2 5.2 DKK billion 0.3 0.5 Risk premium • As previously communicated, this is in line with plan Seasonal build Raw materials • Sake good order and given the macroeconomic environmen
Slide 20: Agenda of Today
AGENDA OF TODAY 1. EXECUTIVE SUMMARY 2. BUSINESS UPDATE 3. Q3 2022 FINANCIALS 4. FINANCIAL GUIDANCE 5. APPENDIX 20 Pandora Q3 2022 - Investor presentation
Slide 21: 2022 Organic Growth Guidance
2022 ORGANIC GROWTH GUIDANCE CONFIRMED GUIDANCE OF “4-6%” ORGANIC GROWTH IN 2022 GUIDANCE ASSUMPTIONS • Pandora confirms full year 2022 guidance • Pandora is currently trading in the upper end of the implied guidance range Organic growth guidance DKK billion • The guidance assumes that network %-poi
Slide 22: 2022 EBIT Margin Guidance
2022 EBIT MARGIN GUIDANCE EBIT MARGIN GUIDANCE CONFIRMED AT “25-25.5%” EBIT MARGIN GUIDANCE 2022 OTHER GUIDANCE PARAMETERS CAPEX: for the year is updated and expected at around 25.0%-25.5% • 5% share of revenue from previously around 6% • Store network: • Pandora maintains the guidance • Concept sto
Slide 23: Rest of Year – Implied Guidance
REST OF YEAR – IMPLIED GUIDANCE ORGANIC GROWTH • The implied rest of year organic growth of -3% to +2% corresponds to 11-17% vs 2019 Implied organic growth vs 2021 • The low end of the guidance assumes that the trading conditions worsens during the remaining part of 2022 8% Implied rest of year EBIT
Slide 24: Closing Remarks
CLOSING REMARKS
Slide 25: Closing Remarks
CLOSING REMARKS Well prepared for a potential Diamonds by Pandora well 13% organic growth Full year guidance of recession. Pre-emptive cost received - with more to vs 2019 despite 4-6% organic growth and measures being taken come in Q4 8pp drag from China 25-25.5% EBIT margin (unchanged) 25 Pandora
Slide 26: Q&A
Q&A 26 Pandora Q3 2022 - Investor presentation
Slide 27: Appendix
APPENDIX 27 Pandora Q3 2022 - Investor presentation
Slide 28: Pandora Consumer
DIRECTIONAL ONLY PANDORA CONSUMER CUSTOMER GROUPS In % Self-purchasers Female gifters Male gifters Hinted by end-user 100% ~30% Minimum 75% of all ~35% ~35% purchases are ~15% Self-purchasers ~15% Minimum 50% 5-10% ~75% ‘decided’ by women shop more frequently of all gifts are 5-10% hinted (index ~13
Slide 29: Pandora Consumer: Female Funnel by Age Group
PANDORA CONSUMER PANDORA FEMALE FUNNEL SPLIT BY AGE GROUPS Base: All women FEMALE OVERALL 18-24 YO 25-40 YO 41-64 YO Unaided awareness 33 38 34 32 Aided awareness 84 85 83 83 CR3 25 32 28 20 Consideration 21 27 23 17 Set1 CR4 58 57 59 58 Purchase2 12 16 14 10 Ownership 30 41 33 26 N=31,016 N=4,128 N
Slide 30: Revenue Development by Global Business Unit
REVENUE DEVELOPMENT BY GLOBAL BUSINESS UNIT Moments incl. Collabs 3,743 3,325 2% 71% - Moments 3,251 2,948 -1% 62% - Collabs 492 377 24% 9% Style 1,520 1,403 -2% 29% - Timeless 749 722 -2% 14% - Signature 459 483 -20% 9% - ME 199 188 125% 4% - Diamonds by Pandora 113 10 97% 2% Total revenue 5,263 4,
Slide 31: Revenue Development by Channel
REVENUE DEVELOPMENT BY CHANNEL Pandora owned1 retail 3,637 3,096 6% 0% 69% - of which concept stores 2,547 2,057 10% 48% - of which online stores 829 873 -11% 16% - of which other points of sale 260 166 44% 5% Wholesale 1,458 1,451 -4% 5% 28% - of which concept stores 793 858 -8% 15% - of which othe
Slide 32: Key Markets Revenue and Sell-Out Growth Overview
KEY MARKETS REVENUE AND SELL-OUT GROWTH OVERVIEW US 1,597 1,342 -9% -3% 30% China 162 233 -46% -37% 3% UK 717 637 5% 13% 14% Italy 486 527 -5% -8% 9% Australia 246 170 40% 33% 5% France 217 221 -1% -2% 4% Germany 254 280 3% -9% 5% Total top-7 markets 3,679 3,411 -4% -2% 70% Rest of Pandora 1,585 1,3
Slide 33: Store Network Development
STORE NETWORK DEVELOPMENT Other points of sale (retail) 431 382 279 49 152 Other points of sale (wholesale) 3,204 3,141 3,256 63 -52 Other points of sale (third-party) 332 478 491 -146 -159 Other points of sale, total 3,967 4,001 4,026 -34 -59 US 405 394 386 11 19 255 28 69 China 232 219 219 13 13 2
Slide 34: Income Statement
Revenue 5,263 4,728 16,607 14,383 Cost of sales -1,227 -1,158 -3,928 -3,402 Gross profit 4,037 3,571 12,679 10,981 Sales, distribution and marketing expenses -2,483 -2,170 -7,602 -6,404 Administrative expenses -576 -444 -1,540 -1,416 Operating profit 978 957 3,537 3,161 Finance income 91 52 311 134
Slide 35: Working Capital and Cash Management
WORKING CAPITAL AND CASH MANAGEMENT DKK million Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 Inventory 5,155 4,239 3,534 2,991 3,197 - Share of revenue (last 12 months) 20.1% 16.9% 14.4% 12.8% 14.4% Trade receivables 880 663 790 1,009 801 - Share of revenue (last 12 months) 3.4% 2.6% 3.2% 4.3% 3.6% Trade
Slide 36: Hedging Policy and Cost of Goods Sold Break Down
HEDGING POLICY AND COST OF GOODS SOLD BREAK DOWN Commodity hedging policy is to hedge at least an average Cost of goods sold break down of 70% of future 12 months use in production For illustrative purposes Other Gold Production labour & overheads Customs & Freight Other raw materials Silver OEM/ODM
Slide 37: Sustainability at Pandora
SUSTAINABILITY AT PANDORA LOW-CARBON BUSINESS As the world's largest jewellery maker, we are We believe high-quality jewellery, superior determined to reduce our climate footprint and business performance and high ethical help set an example for the wider industry. standards go hand in hand, and we
Slide 38: Circular Innovation; Inclusive, Diverse & Fair Culture
CIRCULAR INNOVATION INCLUSIVE, DIVERSE & we strive to ensure that our use of raw materials in both the crafting and sales of our jewellery has the FAIR CULTURE lowest impact possible on the environment, We want everyone – from our customers, employees people and communities. and suppliers to our bus
Slide 39: Key ESG Ratings
KEY ESG RATINGS | PANDORA PERFORMANCE RATING PERFORMANCE Methodology note, low score = good 12/100 – Pandora ranked 10th (out of 177 companies) in Textiles & Apparel sector Methodology note, AAA = top score Top “AAA” rating – 6th straight year Methodology note, A = top score C rating – Top 20% of In
Slide 40: Investor Relations Contact Details
INVESTOR RELATIONS CONTACT DETAILS Investor Relations team Share information Trading symbol PNDORA John Bäckman Identification number/ISIN DK0060252690 Bilal Aziz VP, Investor Relations & Treasury until 17 VP, Investor Relations & Treasury (joined 1 November November GICS 25203010 2022) +45 5356 690
Slide 41: Disclaimer
DISCLAIMER This Company announcement contains forward-looking statements, including, but not limited to, guidance, expectations, strategies, objectives and statements regarding future events or prospects with respect to the Company’s future financial and operating results. Forward-looking statements
Slide 42: C) PANDORA ‘ri
Ad NY C) PANDORA ‘ri